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Keeping your cryptocurrency safe - wallets
12/03/2018

Cryptocurrency wallets - which type should you choose? A beginners guide to hardware, software and paper wallets.

As you start your adventure in cryptocurrency trade, the first question you have to ask yourself is where to keep your cryptocurrency assets.
The tokens you have purchased can be stored in a variety of different wallets offered by both exchanges and third-party organisations.

Most of the available wallets fall into one of the two categories: a hardware wallet, or a software wallet. There’s also the super-analog way of storing your private keys - the paper wallet. What is the difference between those three? Let us take a closer look.

Paper wallets: keep it cold!

While a paper wallet - which is essentially a piece of paper with your private keys printed out in the form of QR codes - might seem pretty old-school when compared to the high-tech blockchain-powered world of cryptocurrency, it does have its advantages. In case of a paper wallet, all you need to worry about is taking care of the piece of paper - don’t lose it, don’t burn it, don’t give it to anyone else and you’re golden.

Of course, the paper wallet is not a particularly convenient way of storing your cryptocurrency data, but it is amongst the safest ones. There’s no way to hack a piece of paper after all.

Hardware wallets: high in security, low in convenience

A hardware wallet, like the name suggests, is a piece of hardware - for example a special USB device - designed with storing your private keys on it in mind. Those kinds of wallets are usually “cold” wallets - which means they are not connected to the Internet, and as such are much less prone to being hacked.

On the other hand, due to their lack of Internet connection, they are not very convenient for storing assets you want to use for trade on a regular basis.

Examples of such wallets include:

  1. KeepKey
  2. Nanoledger
  3. Trezor

Software wallets: convenience at the expense of safety?

If you wish to have an easy access to your assets, and want to be able to make quick online transactions with it, a hot wallet - that is, a wallet connected to the Internet - might be what you’re looking for.

Since your hot wallet is connected to the World Wide Web, it can be potentially targeted by a hacker, which is why you have to put more effort into keeping it safe. We will cover the steps necessary to keep it secure in the next section of this guide.

Software wallets are usually applications delivered by a third party, and can be split into three main categories:

  • Mobile wallets - Smartphone-friendly applications that can be used on the go;
  • Desktop wallets - programs that have to be installed on a desktop or a laptop;
  • Online wallets - crypto wallets that can be accessed via a web browser.

Even if you choose to store a bulk of your cryptocurrency on an offline device, you are still likely to keep at least part of your assets in a hot wallet, to make sure you have a convenient access to them and can trade them with ease. That means sacrificing some safety for convenience.

This means you have to make sure that you only keep your assets in a wallet with high security certificates. For instance, the wallet offered by Darb is fully tested by F-Secure, one of the top companies in the field of cyber-security. It also combines the functionalities of an exchange wallet with an app - making it a solution that is both secure and convenient.

To make sure your software wallet is as secure as possible, check out our list of cryptocurrency safety tips!

Which wallet should you choose?

With so many factors to keep in mind, it is difficult to propose a one-fits-all solution when it comes to choosing the right wallet for you. Ultimately, the choice depends on how much you value convenience and how safe you want to feel about your assets.

We do recommend using a combination of different wallets - keeping part of your assets in cold storage (either a hardware or a paper wallet), and another part in a software wallet, such as Darb. This way, you can have assets ready for trading whenever you need them, while keeping some of your investments offline for increased security.

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